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Issue 26 April - June 2014
LEGAL
QUARTERLYREPORT FROMTHEDIRECTOR: LEGALFORTHEPERIOD 1 JANUARY 2014 TO31MARCH 2014
InvestigatingCommittee
The Investigating Committee met twice during this period (11
February 2014 and 25 March 2014) and referred 39 individual
matters to the Disciplinary Advisory Committee with
recommendations.
DisciplinaryAdvisory Committee
The Disciplinary Advisory Committee met twice during this
period (23 January 2014 and 28 February 2014) and disposed
of 39matters, as follows.
Decisions not to charge:
?
Two
matters in terms of Disciplinary Rule 3.5.1.1 (the
respondent is not guilty of unprofessional conduct; this
includes the situation where the conduct in question might
be proved but even if proved does not constitute
unprofessional conduct).
?
Nine
matters in terms of Disciplinary Rule 3.5.1.2 (the
respondent having given a reasonable explanation for the
conduct).
?
Four
matters in terms of Disciplinary Rule 3.5.1.4 (being
that there are no reasonable prospects of succeeding with
a charge of improper conduct against the respondent).
?
Two
matter in terms of Disciplinary Rule 3.5.1.5 (being that
in all the circumstances it is not appropriate to charge the
respondent with improper conduct).
Decision to charge andmatter finalised by consent order
Seventeen
practitioners were fined:
?
Seven matters
related to inspections conducted by the
Inspections Department. All of these related to a lack of
audit documentation.
Six
related to the 3rd cycle 2nd inspection, category C.
Three
practitioners were fined R30,000, with R15,000
suspended for three years on conditions;
Three
practitioners were fined R20,000, with R10,000
suspended for three years on conditions
One
related to the 3rd cycle 2nd inspection, category A.
The practitioner was fined R20,000, with R10,000
suspended for three years on conditions
?
Two
matters related to the same company and were
referred by the JSE.
The practitioners each issued an unmodified opinion in
respect of successive financial statements which contained
a significant departure from IFRS. This related to the fair
value of an intangible asset on acquisition that was
disclosed in goodwill and not separately in intangible
assets. The practitioners’ unmodified opinions, without
correction of the disclosures relating to goodwill, were
accordingly inappropriate.
The practitioners were each fined R100,000, with a
contribution of R5,000 towards costs, and publication in
general terms.
?
One matter
related to inadequate audit documentation
(working papers) relating to the audits and inadequate
disclosures in the accompanying financial statements.
The practitioner was the auditor of two companies and
accounting officer of one related close corporation. He
issued auditor’s reports containing unqualified opinions
and accounting officer’s reports for two successive years.
The financial statements of both companies were deficient
regarding the disclosure of financial instruments, related
parties and the going concern and, additionally, the
financial statements of one company were deficient
regarding rental income and administration fees. The
financial statements of the close corporation were
deficient regarding the corresponding disclosure of rental
income and administration fees.
In respect of the audit of the financial statements, the
practitioner failed to keep audit working papers and/or
failed to obtain audit evidence; alternatively he failed to
keep adequate working papers and/or failed to obtain
adequate audit evidence.
The practitioner was fined R30,000, of which R15,000 was
suspended for three years on conditions, with an order of
R5,000 towards costs, and publication in general terms.
?
One matter
related to a deceased estate and a close
corporation which formed part of an estate, where the
practitioner misrepresented to his client that the estate
had been wound up and finalised.
In respect of the close corporation he charged fees to